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**Doing the Math: Calculating F&A Costs **

**Step 1:** Calculate the Modified Total Direct Costs (MTDC).

Modified Total Direct Costs (MTDC) are that portion of total direct costs on which we are allowed to calculate the F&A costs for a sponsored project budget.

Duke's F&A cost rate agreement provides that the following costs are excluded:

- Capital equipment (individual items which cost $5,000, or more, and have a useful life of more than two years).
- Subaward costs in excess of $25,000.
- F&A Costs are collected on only the first $25,000 of the total cost of each subaward. The total cost includes all the years a subaward will be funded during a given project period. Thus, if your budget has a subaward line item of $40,000 in each year of a four year project, F&A Costs are only applied to $25,000 in year one. No F&A costs will be collected on the subaward for the remaining years of the project. However, if the subaward budget is only $10,000 per year, F&A costs would be collected on the entire subaward amount for years 1 and 2, on $5,000 in year 3, and not at all in year 4. If your application is for a competitive renewal, even if you are using the same subrecipiants, you may again collect F&A costs on the first $25,000 of each subaward.

- Student support costs, such as fellowships and scholarships, can only be charged to projects for which student training is the primary intent.
- When graduate students are paid salary from a grant or contract, the budget must include the appropriate Tuition Remission payments determined by and paid to the Graduate School. Under the negotiated rate agreement, these costs are also exempt from the F&A calculation.
- The calculations shall also exclude capital expenditures, patient care costs, and rental costs of off-site facilities.

**Step 2:** Apply the correct F&A rate, taking into account Duke's rate and any restrictions imposed by the sponsor.

* Note that Modified Total Direct Costs (MTDC) and F&A costs are automatically calculated by SPS. If a sponsor requires a rate different from Duke's, the system can calculate at the specified rate.

In the case of a competitive renewal proposal, F&A costs (link is external) associated with a subaward are calculated as if the proposal were a new submission.